Stability and discipline
Mike Smith, president, Scope Aircraft Finance, pre-pinkie appreciation.
In August, while we were cleaning up after my two-year-old daughter’s birthday, I injured my pinkie finger while washing dishes. A typical dad move. Words by Mike Smith, president, Scope Aircraft Finance.
Over the following weeks, as I was doing daily tasks, I came to realise just how underappreciated my pinkie finger is. Up until recently, I thought the only thing my pinkie finger did was hitting the “enter button” on my keyboard. But, with my finger bandaged up I noticed the humble pinkie is actually a big deal.
In fact, I’ve come to appreciate my pinkie as “the great stabiliser”. Everything I tried to hold or move, required a different approach because my pinkie finger wasn’t there to hold things in place. Think about it. Grab your cell phone with one hand. What’s at the bottom of the phone? Your pinkie, holding the phone stable. Pick up a glass of your favourite beverage. Look at the bottom of the glass, your trusty pinkie is holding the glass stable.
What does this have to do with airplanes? As I was working through this thought exercise I was thinking about the value of things that provide stability for others. And in that reflection, I realised the banking industry is a great stabiliser of the economy. Distilling that thought down even further, the finance industry is a great stabiliser of the aircraft industry as well.
The capital provided by an aircraft lender provides buyers the opportunity achieve their aircraft ownership dreams, and keeps the industry moving forward. Without a strong, stable capital system to provide aircraft loans, the industry would not thrive at the level it does today.
Aircraft lending itself isn’t rocket science. We make loans on aircraft, ensure the borrower has the ability to repay those loans, and if they don’t we repossess the aircraft back and sell it. But through the lens of stability, the challenge becomes greater. Providing accessible capital through the ebbs and flows of the economy takes a little more work.
In one word, it’s done through discipline.
A long-term minded aircraft lenders remain disciplined in how they approach the job. And that discipline creates stability. I think most the aircraft lenders in the industry that have been around a long time share in that mind set. In fact, it’s one of my favourite parts of the role we play in the industry.
Disciplined lending is good for both banks and borrowers and it creates the capital stability the industry needs over time. We’ve been in pretty good economic conditions for our industry since the post-2008 recovery, and that may not always be the case. In fact, there are plenty of macroeconomic signals happening right now which suggest change maybe on the horizon. And as we all know, recessions often happen slowly then suddenly.
In times of change, disciplined lenders will still be there to help provide lending solutions to borrowers in need of capital. That provides stability in good times and bad. The same stability I learned my pinkie finger provides, so long as you’re more careful than I was when doing dishes.
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